Urban development ministry seeks lower home loan rates

New Delhi: With an aim of reversing the slowdown, urban development minister Jaipal Reddy has sought an additional package for the real estate sector.

In a letter to the Prime Minister, the minister for urban development, said interest rates for home loans of up to Rs500,000 should be kept at 6.5%, while loans between Rs500,000 and Rs3 million should be levied interest of 7.5% annually.

Reddy has stated that “more needs to be done to reverse the slowdown facing the sector”.

“Some of these suggestions with appropriate modifications could be favourably looked into,” he said in the letter to the Prime Minister.

Reddy also said that the ceiling for income tax rebates on interest paid on home loans be raised to Rs300,000 from Rs150,000 currently.

“Housing projects should be treated at par with the infrastructure sector for all purposes including bank funding,” he said in the letter, a copy of which was made available to Reuters.

But Reddy also said the industry should match government measures by lowering house prices and investing more in affordable housing.

The real estate sector plays a dominant role in India’s economic growth and employment generation.

The government is scheduled to unveil a second stimulus package on Friday.

Trade Minister Kamal Nath had last month said the government was looking at more steps to boost liquidity, and mulling steps to help exporters and the real estate and infrastructure sectors as part of the fresh package.